The Nation Newspaper

Tag: Dr. John Isemede

  • How modular refineries will curb oil theft

    One way to address the growing menace of oil theft is the setting up of oil refineries, a cross section of experts have said.

    Modular refineries, they reiterated, would help in no small measure to curb the rising cases of oil theft as well as pipeline vandalism especially in the oil-rich Niger Delta.

    According to the Chairman, Gas Users Group of MAN, Dr. Michael Adebayo, more modular refineries would help in solving the issues of crude oil theft, fuel high prices and scarcity.

    “It is far better than the analogue ones which is giving us problem in the country right now. Modular refineries would help in boosting the availability of refined products in the country, and with this, things can get better. With Dangote refinery coming on board by 2020 things will get lot better. This means that we will stop importing fuel, kerosene, diesel and other petrochemicals; it would be a better Nigeria. This would help in saving our foreign exchange instead of using them for dumping,” Adebayo noted.

    An economic analyst, who was a consultant to the United Nations Industrial Development Organisation (UNIDO), Dr. John Isemede stated that if these illegal refiners in the Niger Delta are given license to operate, with a set standard by the SON, and other relevant authorities, the country would be having more than enough of these refined products.

    Isemede said, “There is nowhere in the world that people are not doing the opposite things. When these illegal refining activities are monitored and adequately supervised, to follow a set-up standard, petroleum products would be available at cheaper rate. It is easier to refine crude oil than to refine the local gin (Ogogoro). So, if crude is sold to them under the supervision of relevant agencies, mandating to install tank farms, have their trucks on the roads, and so on, I tell you that Nigeria will stop importation of fuel before December.”

    However, the Director General of Lagos Chamber of Commerce and Industry, Muda Yusuf, the country needs to moderate its expectations from modular refineries as a solution to the socioeconomic problems in the Niger Delta.

    “For instance, a 24,000 b/d modular refinery costs about $250 million. This is an equivalence of N72 billion. How many investors can afford this?  What this shows is that modular refineries should not be perceived as a possible substitute for the illegal refineries that currently exist in the oil producing areas of the country. These illegal refineries do not pay for crude. So they operate on zero cost for crude. Whereas a modular refinery would not operate with such a model since it will acquire necessary documents before commencing production. It is doubtful if the problem of oil theft, vandalisation of pipelines, environmental degradation, and other criminal activities can be solved simply by promoting investment in modular refineries,” Yusuf added.

  • ‘We need to boost infrastructure’

    Dr. John Isemede is former Director -General of Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and currently consultant to the United Nations Industrial Development Organisation (UNIDO). In this interview with Charles Okonji he sets agenda for the government in the next 12 months. Excerpts:

    It is the view of some Nigerians that by now President Muhammadu Buhari should have reshuffled the cabinet in order to determine the agencies that are not performing or otherwise. Do you share such sentiments?

    Again, it takes 12 months for you to be in the class before you move to the other. I was thinking that after two years or 18 months, you review the cabinet, or move some from one location to the other. The first thing we have to do is to look at petroleum, how have we fared in the past three years? What are we importing and what are we producing? The turnaround at the refineries, the pipeline and how we have fared and all these are the things that the government has to look at.

    In every government, there are three questions they have to ask. What of the exploration, is it being dominated by the foreigners? The second level is the refining and the pipeline. There is little or nothing coming from that. The area where we are very strong in is the exportation of crude and the importation of refined products, which is causing problem now. We have to look at the petroleum sector, and if we look at it, you see that some are pulling out of Organization of the Petroleum Exporting Countries (OPEC) and we are banking on 2million barrels per day. If we now look at 2million barrels per day and we divide it by 200 million Nigerians, you will notice that a barrel of petrol is to 100 Nigerians, and if you multiply $50 per barrel by the exchange rate, and divide by the population of Nigeria, an average Nigerian is entitled to between N80 to N200 per day. This is an indication that this country is very poor, and that petroleum is not what we should be focusing on now.

    The second one is why was the country so rich and so powerful in the 60s? It was simply because we ran region governments. The government should now sit down and look at what is on the concurrent list. There are things that the government should be able to share. Cocoa is produced in the west, palm oil and all that is produced in Edo to Rivers and so on. Encourage communities, local governments to be able to develop their value chain, and not that everything is concentrated in the centre. Go to the Ministry of Agriculture in Abuja for instance, you will see thousands of people, what are they doing? These people that are supposed to be extension workers.

    Another one is that everywhere we see people complaining of bad roads, and people are concentrated in the Ministry of Works, these are the people that are supposed to be maintaining the roads. The issue of concentrating everything in the concurrent list is what is causing this depression in the economy.

    The fourth one is the area of value chain, and what we call the diversification of the economy. You cannot diversify from primary to primary. What we are hearing is that they have diversified into agriculture, have you been able to develop the agricultural value chain? What programme do you have for farmers? Of course, the Anchor Borrowers fund is OK. But in two or three years, if there is a bumper harvest, where are the processors? If you now move to the last level which is export, what have you put in place to drive the chain from the farmer to the processors and to the international market?

    The fifth one is the area of manpower, many of us are not happy that the Academic Staff Union of Universities (ASUU) is still on strike because we are mortgaging our future, most of us were trained by institutions in Nigeria, we could not have been here today consulting with the United Nations with many Nigerians working in New York, ambassadors here and there. There are Nigerians who are working in other parts of the world. So you cannot have a buoyant economy if you don’t have a good manpower.

    The sixth one is on the area of agreements, we don’t have a foreign policy objective and if we say that we have foreign policy objectives, we don’t have foreign policy strategy and if we have foreign policy strategy, the economy would be better, in the sense that countries we have signed agreements with, by now Nigerian businesses would have been booming in other countries like the way we see Shoprite. We see the Lebanese, the Koreans, and when you see Nigerians in some other countries; they do menial jobs, and are selling things by the side of the roads. That is not in the nature of the agreements that we have signed. Most of the agreements we have signed in Economic Community of West African States, (ECOWAS) turned out to be negative. If Value Added Tax in Nigeria is 5% and VAT in Benin is 18% plus 2%, is that a sub-region, is that a customs region? What about free trade area, it is wrong on our part to sign Common External Tariff (CET) where there is no customs union. Nigeria is charging 5%, because there are price levels of integration, then, why are we now crying that there is nothing going on between Benin Republic and Nigeria. On the Continental Free Trade, have we been able to identify what we are bringing to the table. In other parts of the world, it is not the duty of government to create jobs. Government does not create job, its responsibility is to create enabling environment under PPP. On the CFTA agreement there is a big divide. The organised private sector, how organised are they? They go about signing agreements, organising the Lagos Trade fare, the Enugu Trade fare, the Abuja trade fare, and you don’t even see their pavilion, and they do not showcase any product. They are importers representatives, even the committee set up by the government has not called anybody to come and educate them. Some of us would have told them that this was what we need at the ECOWAS. But the committee set up at that time advised that Nigeria sign the agreement. What I am saying is that the OPS is supposed to be ate fore front, but they are now at the back seat, which is now creating the hic-ups that we have not signed.

    This was what we did against American Growth Opportunity Aid (AGOA) that the government that is supposed to be giving out regulations is now the people signing agreements on our behalf. If we don’t put our house in order, and identify our products the way South Africa identified theirs, like the South African Airline, their Shoprite, their Apple and that, we would end up signing because the last time I confronted one of the government officials, he told me that when you go to South Africa, Kenya and other places, you see Nigerians doing business, but when I asked him if the Nigerians he saw were trading on Nigerian goods, he could not answer.

    The next one is on the ambassadors. The era of just calling people tell them to take a bow and go to represent Nigeria in other countries is bad. There is a need for the ambassadors designate to work with the private sectors for at least, a minimum of six months. They should be able to know the rules guiding goods leaving Nigeria. Ambassadors from other countries market their countries goods, who is selling Nigeria? You see our officials taking over 200 people to international trade fare and all that, we don’t need 200 people to market Nigeria, we only need the sitting ambassador or two to three people to sell Nigeria.

    The last one is the Diaspora, you have heard about the India, and the China tow concept. What are those in diaspora doing for Nigeria? They ought to give us information, tell us the kind of business that we can do with them, tell us the type of raw materials we can get from their countries and work with us on being the sellers of made in Nigeria goods.

    The conclusion is that we cannot grow an economy without airline, shipping line, and the congestion in Apapa. There is nowhere in the world where you sit down and say that you are the giant and 60% of the rail way network in Africa with South Africa. There is no way you cancan be claiming that you are a giant when Morocco has supersonic train. We should be thinking of using the water ways, we are not asking the government to do it, all we are saying is that the government should create the enabling environment. There are lots of foreigners in the Nigerian Stock Exchange, three are foreigners who would put their money in telecoms, some will put their money in airlines, some will put their money in shipping lines, some on roads and so on and so forth.

    We should not be involved in running stock and shares economy, that people will just invest in shares and when the price crashes, they sell and go. Now is the time to invite them to come and invest in infrastructure, because the infrastructure in China and in America is not owned by those countries alone.

  • Why rice smuggling may not stop

    Charles Okonji in this report examines major factors responsible for the rising menace of rice smuggling and why it may persist

    Despite concerted efforts by the federal government over the years to curb the menace of rice smuggling, imported rice finds its way into the Nigerian market through over 4000 routes across the country’s border as it seems to be one of the most thriving businesses in recent times.

    In defiance of seizures and confiscation of impounded consignments of rice by the customs the nefarious activities of these economic saboteurs have continued unabated given the feeling that law enforcement agencies are overwhelmed.

    Speaking with a cross section of experts, they attributed to a constellation of factors chief among which is the result of incurably defective and but failed government policies, wrong trade agreements, poor enforcement and conspiracy of some of the law enforcement agencies with smugglers amongst others.

    Firing the first salvo,  according to the United Nations Industrial Development Organisation (UNIDO) consultant, who was the former Director General of Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture NACCIMA, Dr. John Isemede, rice smuggling, he emphasised will continue as long as Nigeria share common boundaries with its neighbouring countries, since some of these boundaries are not well demarcated, which makes it porous.

    He noted that it is easier for countries like Madagascar, Japan, Equatorial Guinea or Cape-Verde, which are island that can only be accessed by air or by sea to curtail or to check smuggling.

    He admitted that smuggling is done world-wide, explaining that in an attempt to curtail smuggling in Europe, duty shops were introduced.

    “Smuggling starts as a legitimate business but ends up as an illegitimate business. Smuggling is between importation and exportation. When you are sending 5000 goods to Nigeria and you declare 500 to reduce the amount of duty payable, that is an act of smuggling.

    “In West Africa, we call it smuggling, it is known as commodity shunting. This is a situation whereby people load their goods and begin to have handshake with security agencies at every check points. That is why there is high rate of bribery; this is commodity shunting as there is no proper documentation of the actual transaction. People just load their goods in the vehicle either from Benin Republic to Nigeria or otherwise.

    “The rice we are talking about is all over the border, just like the time we were talking about turkey and chicken being smuggled into Nigeria. Who are those responsible for this business? They are the multinational corporations and they are the producers. They put distributors at the borders, and they provide these products at very cheap rates to entice people to buy,” Isemede stressed.

    He pointed out that one of the reasons why smuggling is thriving is that the culture of importation has not allowed Nigeria to develop forex.

    In his words, “When you get to the bank for loans, nobody would look at you talk less of granting you loans if you want to go into manufacturing. We are well prepared for import, which is why it is on a single window. So you can see why there is a big problem.”

    He lamented that the government end up using the wrong people to manage sensitive places in Nigeria, adding that they go about collecting money from the government signing agreements, without knowing what is in the agreement they are signing.

    The UNIDO consultant said, l“When you talk of Common External Tariff, Customs Union, and trade agreements, professors of economics, experts and OPS are not consulted. West Africa is just a Sub-Region, not a Customs area, because there are tax differentials. This compounds the problem because we pay different tariff in Nigeria while the neighbouring countries pay different tariff.

    “VAT is 5% in Nigeria while that of Benin Republic is 18%. For this reason, we cannot take that advantage in Nigeria because it takes about 20 days for ship to turn around in Nigeria and about three weeks to get your goods out of the port, while that of Benin Republic is just about 24 hours. So if you think about all the delays and the demurrage in the Nigerian port, people tend to go into smuggling.

    “Even when they have the opportunity of using the Apapa port, how accessible is the road? What has happened to Cocoa port, what has happened to Burutu port, what has happened to Sapele port, Focados port or even Calabar port? That is one reason that smuggling is on the increase.”

    The former NACCIMA boss regretted that that there is no support to the OPS that are doing business in Nigeria, saying that the banks are always looking at the areas of importation.

    He said that lack of funds to support the exporters and non-functional the railway system was among the cartelising factors that fuel smuggling.

    “Again, a lot of vehicles move from Nigeria to Ghana, Benin Republic and others on the daily bases and these people are allowed to carry one or two bags which is said not to be at commercial value, but if you have 50 people in a bus that carry one or two bags each and declare as personal effects, don’t you know that it has turned commercial quantity already. What about the border markets in Bornu State which 50 % of it is in Cameroun and the other 50% is in Nigeria. This is a fertile ground for smuggling.

    “However, the policies of CBN are killing export. It only supports oil companies that can transfer dollar to themselves. At present I cannot send dollar to anybody that has a domiciliary account. If I am doing legitimate export and I want to collect my money, I have to collect at 350 to the US$, but if I want to pay shipping companies, I have to buy dollar from the neighbouring countries because a lot of Nigerian exporters have carried their domiciliary accounts to the neighbouring countries. Just like what happened in 1993 when we had dual exchange rates of N22 to the dollar and N40 to the dollar. So what the embassies in Lagos as at that time did was to move their exchange to the nearby countries.

    “So, if the CBN can understand balance of trade and balance of payment, that as we are giving, we are taking and we don’t have series of exchange rates, smuggling would stop. This is because most of the people use their money to buy rice since they cannot bring in their foreign currencies. So, it is the policies that are being put in place by people who are not into business that is causing problems for Nigeria. If we have single exchange rate and anyone can transfer dollar to the shipping company, and to anyone else, smuggling would stop.”

    Isemede stressed that most Nigerian exporters move their commodities such as cocoa, yam, cashew nuts and others the neighbouring countries for export as the agencies responsible for inspection and standardisation do not have the right specification to avoid rejection.

    “So when Nigerians have the opportunity of carrying cashew nut, share butter and other commodities to export, they buy rice to come and sell in Nigeria since it is cheaper in those nearby countries.

    “This is to say that the smugglers do not just wake up to say I want to be a smuggler. So, it is the policies on ground that is making people to go into smuggling. It is quite unfortunate that the customs are busy looking for smugglers but they have not done anything to make good policies that would make business flourish.

    “The issue is that the government is not monitoring what is happening in the economy. Government policies on trade ought to be reviewed with the representatives of the OPS. Sadly, most of these people would go about organising trade fair and trade missions, signing agreements that they do not understand, thereby killing the economy. Also, all the goods you see at trade fairs are imported. So industrialisation is next to zero in Nigeria. Everybody wants to import and sell,” he lamented.

    Echoing similar sentiments, the Director General of the Lagos Chamber of Commerce and Industry, LCCI, Mda Yusuf, smuggling became a booming business when the government practically imposed ban on importation of rice.

    He noted that the huge difference in the price sold in Nigeria and the neighbouring countries, stimulated greatly smuggling of the commodity through the country’s massive porous borders.

    “Before now, we have been told that importation of rice has dropped by 90% and that local rice production has increased to almost six million metric tons. I do not believe in those statistics, I believe that there is still a big gap between domestic production and domestic demand. So that is a major issue. This is because we have not been able to build the capacity of local production. Many of the rice farmers and value chain are still cultivating through the traditional means. The level of mechanisation is still very low, and productivity is still very low, so we need to address these key issues. Until we are able to close the gap between domestic production and domestic demand smuggling will not stop. This is because the demand is in excess of 7 million metric tons and the local production is not up to 4 million metric tons,” he further noted.

    Equally responsible for the growing menace of smuggling,  he maintained,  is the cost of domestic rice which is higher than the imported one.  “High cost is another factor that is aiding smuggling, which ideally, the locally produced rice ought to have been cheaper. This is so because the average man is looking at how to feed his family with a very low budget, so he goes to the market and look for what is cheap to buy.”

    Yusuf however noted that it’s high time that the government comes to terms with the realities on ground, and do less of propaganda, urging government to stop saying that the country shall be self-sufficient in rice production in 2019, whereas the market situation is not saying so.

    “The government should work out possibilities on how to enhance productivity in rice production so that they can go fully mechanised and bring down their cost. If the price is low, it is easier to defeat smuggling because people would buy what is cheap,” he maintained.

    Nigeria rice capacity sufficient

    Meanwhile,  the President, Rice Farmers Association of Nigeria, Aminu Goronyo, says annual rice production in Nigeria has increased from 5.5 million tonnes in 2015 to 5.8 million tonnes in 2017.

    Goronyo disclosed this recently in an interview with News Agency of Nigeria  in Abuja.

    He said that in 2015, Nigerians spent not less than N1bn on rice consumption, adding that while  spending had drastically reduced, consumption had increased because of increased local production of the commodity.“The consumption rate now is 7.9 million tonnes and the production rate has increased to 5.8 tonnes per annum,’’ Goronyo said.

    The RIFAN president said the increase was as a result of the CBN’s Anchor Borrowers Programme with a total of 12 million rice producers and four million hectares of FADAMA rice land.

    Goronyo said that the programme since inception had created economic linkage between Small Holder Farmers and reputable large-scale processors, thereby increasing agricultural outputs and significantly improving capacity utilisation of processors.

    The ABP was launched by President Muhammadu Buhari on November 17, 2015 in Kebbi, aimed at creating a linkage between anchor companies involved in the processing and SHFs of the required key agricultural commodities.

    The fund was provided from the N220 billion micro, small and medium enterprises development fund.

    ABP evolved from the consultations with stakeholders comprising federal ministry of agriculture and rural development, state governors, millers of agricultural produce, and smallholder farmers to boost agricultural production.

    Goronyo said under the ABP, RIFAN in the next 24 months would commence rice importation to West African countries as the necessary arrangements had been put in place.

    “For self sufficiency, adequate and enough paddy for production ABP, which started in Kebbi state has been extended to 26 states.

    “As a step further, RIFAN is in collaboration with some agencies to replicate the CBN APB programme in some states to increase production,’’ he said.

    He said that RIFAN had moved a step ahead not to be caught in the web as production was being complemented by adequate provision of farm implements and inputs.

    He said that RIFAN was set on capturing the West African rice market by properly harnessing its resources.

    According to him, the country has huge human resources, favourable climate and potential to undergo a steady transformation in terms of techniques and marketing.

    Goronyo said that even the Asian countries with similar weather conditions had successfully developed their rice production output and processing for global export.

    He, however, noted that some influential Nigerians with their foreign collaborators were trying to frustrate the efforts of government on making the country to be self sufficient in rice production.

    Way forward

    It would be recalled that Kebbi State governor, Senator Atiku Bagudu in an interview recently had xplained how Nigeria can stop smuggling of foreign parboiled rice from Benin Republic and other parts of the world.

    According to him, the best thing the government can do is to forge a synergy of cooperation with her neighbouring countries.

    “If we are smart as a country we should be treating other West Africa countries as part of Nigeria. We should make Benin Republic as the 37th state of Nigeria. We should encourage their farmers so that they can also become rice farmers and I am sure their production is so small that it cannot threaten Nigeria’s production and by so doing, they would participate in helping Nigeria fight smuggling.”

    He was however quick to add that even countries being used as smuggling base are also victims. “Sometimes they are also as much a victim as we are because this smuggling is perpetrated by economic saboteurs that sometimes are transnational in nature. There are foreigners of different nationalities mostly Asians who exploit countries but that is not to say that the national authorities of Benin Republic cannot do something to help, they can and President Buhari has been very critical about it.

    “Some week ago, the President of Benin Republic rushed to Nigeria because Nigeria has been rightly so expressing its anger at the situation. It is not only rice but poultry too are smuggled into the country. Nigeria’s poultry is being threatened by smuggling from Benin Republic.”

    On whether the government should wield the big stick as it has done in recent times by closing  down the borders, the governor said such action was in order.

    “Ihave called for that before because this will show them that allowing smuggling is a threat to our economic interest and it is even a threat to the ECOWAS protocol because if we cannot support each other to produce domestically, then one of the major objectives of ECOWAS protocol has been defeated. The closure of the border is a yes, if it’s the only thing that can send the right signals. But more than that is for us Nigerians to relate to this country as provided for in the protocol as if they were part of Nigeria because it would help us to also help them boost their domestic trade. If it is the only thing that will draw attention and make other West Africa countries know that we mean business because we do mean business. We want Nigeria and indeed West Africa to be productive because we are competitive. We should be selling to the world, not the other way round.”

  • Nigeria not completely out of recession-OPS

    •Says only oil sector exited recession 

    Despite all the measures deployed by the managers of the Nigerian economy, economic recession defied them all as it has persisted, thereby forcing most manufacturers to close shop and leaving the citizenry worst-off.

    The foregoing was the views expressed by members of the organised private sector (OPS) who spoke with The Nation on the vexing issue.

    Firing the first salvo, the former Director General of the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), who is also a consultant to the United Nations Industrial Development Organisation (UNIDO), Dr. John Isemede, stated that the country cannot be said to have exited recession with the figures being released for the economic performance of the first quarter (Q1), which recorded growth of 1.95 percent, and the second quarter (Q2) is 1.5 percent.

    He pointed out that growth figure dropped, which indicates that the economy is crawling, and not near to being healthy, arguing that the situation is like the country being on a cliff, which is either going up nor down.

    Isemede said, “This is an indication that Nigeria is not fully out of recession, and would likely go into depression this time around, if right recovery policies are not put in place and properly managed.”

    He explained that the nonoil sector that accounts for over 89 percent of the economy with key sectors including manufacturing, agriculture, telecoms, amongst others is still in recession due to lapses in policy reforms towards jobs creation and manufacturing.

    “The real sector is still wrestling with serious productivity challenges arising from the constraint of infrastructure, particularly power and logistics. It is imperative that efforts are geared towards investment and policies focusing on improving logistics and enhancing the power sector. The manufacturing sector also slowed from 3.39 percent in Q1 to 0.68 percent in Q2 as a result of massive infrastructural deficit, and logistic challenges. The Apapa gridlock, access and cost of credit, weak purchasing power, multiple taxation amongst others are points to ponder.”

    Echoing similar sentiments, Dr.  Frank Jacobs President of the Manufacturers Association of Nigeria (MAN)  noted that the economy is not fully out of recession, warning that the economy can still slip back into recession except urgent policy decisions are taken.

    “Technically, Nigeria has exited recession, but the economy of the country is still vulnerable. The macroeconomic indices and structural reforms need urgent attention to contain vulnerability and support sustainable private sector-led growth.”

    Jacobs however recommended that the major policy reforms must be considered urgently to ensure sustainable growth, as well as effective implementation of the Economic Recovery and Growth Plan (ERGP).

    ”We recommend strong implementation of the ERGP to boost local and foreign investors’ confidence in the Nigerian economy and generate additional investments, which appears critical to building a sustainable recovery. We are of the opinion that government needs to adopt specific, targeted and effective policies to attract and promote private capital investments in the Nigerian economy, especially infrastructure and industry,” Jacobs stressed.

    The chief executive officer of Erisco Group, Chief Eric Umeofia, stated that Nigeria is not out of recession until the country starts manufacturing what it consumes and also manufacture for export.

    “I do not trust their judgment. What we have is artificial growth. Until we base our GDP growth ratings or measurement on manufacturing, we would not get it right, and I will not accept or believe their judgement,” he deadpan.

    “I would prefer a system whereby our oil would be set aside as reserve and not the economic driver, with the overall economy depending on the volume of oil exported and the price of the oil, which is not stable. China, Korea, and Malaysia do not have oil, but their economies are doing very well. I refer the Nigerian experience as international manipulation.”

    Umeofia pointed out Nigeria will truly exit recession when the CBN start funding manufacturing in the actual sense, and on a single digit window, stressing that CBN should realise that funding agriculture alone cannot perform the magic of growing the country’s economy.

    “Until the system does the right thing, by putting the right policy measures in place, and enforcing it to support the President in trying to revitalise the economy, growth would be farfetched. All the growth indices they are publishing are nothing but fallacies. The economy is still depending on foreigners, they are only coming to manipulate imported goods as if they were manufactured in Nigeria,” he lamented.

    The Director General of Lagos Chamber of Commerce and Industry, LCCI, Muda Yusuf, observed that from the technical view, the country has exited recession as growth has been recorded for more than two consecutive times, but from the empirical position, which varies from sector to sector, some are yet to recover from the effects of recession, hence produce below capacity and in most cases close down.

    The manufacturers that are complaining are talking in terms of business position, which has not improved in the area of patronage, he stressed.

    “Also, the macroeconomics perspective is the aggregation of the GDP, and we should be concerned with the micro and macroeconomic issues, such as forex, and reduction of taxes on imported raw materials and reduction in the interest rate to encourage investors and manufacturers, which will invariably improve the GDP growth,” the LCCI boss noted.

    The Chairman, Policy Committee of MAN, who was also the former Chairman of Electrical Group of MAN, Engineer Reginald Odiah, noted that the country is not completely out of recession, but just lucky that more money is generated through the sale of crude oil.

    He said: “Nigeria is just lucky that oil price is on the increase; otherwise, manufacturing is consistently dwindling. If you look closely at it, most businesses have closed down. I am not seeing clear policy direction and political will to bring the country out completely out of recession completely. The government is just focusing more attention on the 2019 general election. We just need to make one more mistake and the country would plunge back into deep recession.”

    The Chairman of Apapa Branch of MAN, Olukunle Obadina, stated that the government reforms in the manufacturing sector is not deep enough to accelerate growth in the sector, as growth has remained stunted over the years.

    Obadina said, “These challenges could be attributed to many factors, ranging from funding challenges especially availability of long-term funds, high interest rate, foreign exchange availability, poor support infrastructure, multiple taxes and levies by various tiers and arms of government, policy summersault/inconsistency, absence of core industries that would produce raw materials, insecurity, to absence of inadequate support to encourage the growth of small and medium scale industries. The manufacturing sector is the engine of grow of most economies and a catalyst to economic development, as it continues to provide a pathway from subsistence agriculture to rising incomes and living standards.”

  • Is Nigeria sliding back into recession?

    Widespread fears over the possibility of the country suffering economic depression soon after exiting recession has set concerned Nigerians on the edge, report Ibrahim Apekhade Yusuf and Charles Okonji

    It’s exactly a year since Nigeria was technically declared out of recession with assurances by the economic managers that efforts would be expedited to set the country on a growth trajectory aided in part by clearly defined economic recovery plan.

    Expectedly, the government Economic Recovery and Growth Plan (ERGP) was introduced just in time to get the economy back on an even keel.

    As proof that things may be in the upswing, the National Bureau of Statistics (NBS) in a release said the economy had exited recession as shown in the results of the second quarter of 2017 with a Gross Domestic Product (GDP) growth rate of 0.72 per cent.

    According to the release, the GDP growth rate rose to 1.17 per cent in the third quarter of 2017, 2.11 per cent in the fourth quarter of 2017 and 1.95 per cent in the first quarter of 2018.

    Interestingly, the projection of the International Monetary Fund that the economy would grow by 2.1 per cent by the end of 2018 was also lauded by the NBS as something achievable.

    Economic measures skirting around the issue

    It however remains to be seen if such plans have actually impacted the economy positively thus far as in view of concerns raised by economic watchers.

    In the opinion of those who hold the levers of the economy they are hardly convinced that things are in the clear. As far as they are concerned, the numbers don’t add up yet.

    In the view of Mr. Olusegun Oshinowo, Director General of Nigeria Employers’ Consultative Association, the economic uncertainties occasioned by lingering recession, led to a gale of job loss in the past few year, especially in the organised private sector.

    Specifically, he said, “The unemployment situation is worrisome. We have a youthful population, which ordinarily should be a demographic blessing but unfortunately has become an economic challenge in terms of providing gainful employment.”

    The NECA boss, who also serves as a Director of Nigerian-German Chemicals PLC including boards such as the Nigeria Social Insurance Trust Fund (NSITF), Nigeria Labour Advisory Council, National Pension Commission (PenCom), National Orientation Agency, and the National Health Insurance Scheme, lamented that there is quite a lot wrong with the system.

    “We are not yet there at all. If you are talking about green initiatives, you are talking about green jobs. The stage we are now really, going by the statistics the NBS released recently, almost about 12.2million Nigerians are unemployed. I can tell you that is quite conservative, very, very conservative. In fact, I won’t believe it because if 75 per cent of our populations are youths and you apply the unemployment rate in Nigeria to that youthful hands in our demographic profile, the figure you will get, will be far more than 12.2million. Now, if you want to promote a green job initiative, the issue is that, when you look at the environment in Nigeria, what type of job is the Nigerian economy capable of producing now.

    “We have got to be really honest with ourselves; there is nothing near in the economy of green jobs. Our priority actually is to make our economy grow to a level where it can generate jobs for millions of our youths. Our youths are not looking for big jobs. They are looking for the jobs or perhaps any job for that matter, to be engaged in. I am saying in the context of Nigeria given the scale of unemployment we are in, what we are interested in really is, are good jobs for our youths. The next level of that engagement can now be whether those jobs are green or not. But let us engage them productively first,” he said matter-of-factly.

    Echoing similar sentiments, the former director general to Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dr. John Isemede, stated that the country cannot be said to have exited recession with the figures being released for the economic performance of the first quarter (Q1), which recorded growth of 1.95 percent, and the second quarter (Q2) is 1.5 percent.

    Isemede said; “This is an indication that Nigeria is not fully out of recession, and would likely go into depression this time around, if right recovery policies are not put in place and properly managed.”

    The real sector, he observed, “is still wrestling with serious productivity challenges arising from the constraint of infrastructure, particularly power and logistics. It is imperative that efforts are geared towards investment and policies focusing on improving logistics and enhancing the power sector. The manufacturing sector also slowed from 3.39 percent in Q1 to 0.68 percent in Q2 as result massive of infrastructural deficit, and logistic challenges, the Apapa gridlock, access and cost of credit, weak purchasing power and multiple taxation, amongst others.”

    The Chairman, Policy Committee of MAN, who was also the former Chairman of Electrical Group of MAN, Engineer Reginald Odiah, noted that the country is not completely out of recession, but just lucky that more money is generated through the sale of crude oil.

    In the opinion of Dr. Austin Nweze, political economist and faculty member of the Pan Atlantic University, Lagos said, “Everything happening now is artificial. It’s just some kind of manipulation to pretend that all is well. All is not well politically, economically and socially in every facet of Nigerian life. Even the National Bureau of Statistics (NBS) also came out to support what myself and some other people have been saying that unless there is a change of policy the recession will linger on till 2018 unless we begin to do something that will drive domestic production. So we really need to look at that. Recession, as I said will go hopefully towards the end of 2018 or early 2019. Recession does not just happen and it’s not something that’ll just go by wishing it away. You have to make deliberate efforts.

    There’s even a global projection or prediction that by 2018, there will be another round of recession which will further compound Nigeria’s recession. So there’s a problem. If anyone tells you recession is over or simply tries to wish it away, it’s impossible to wish such things away.

    Way forward

    To many analysts, the way out is to begin to invest inwards by looking at domestic production, job creation among other measures.

    “Our focus should be on job creation and not job loss because most of the factors important for job creation will stem job loss. The supply of labour into the economy has far outstripped demand. The problems are double faced: quantity and quality. Given the scope of the problem, we require a multi- pronged approach/solution that will include promotion of sustainable enterprises through an enabling business environment, sustainable and pervasive good governance at all levels of government, effective and job-focused macro-economic policy framework, political restructuring that will lead to creation of multiple productive and economic centres, educational reform to enthrone functionality as against literacy, indigenous employment-supportive immigration policy, comparative advantage-based backward and forward integration. This is the long term solution to our unemployment malaise,” said Oshinowo.

    “As far as I’m concerned, the exchange rate crisis will still be there no matter how they try to manipulate it. The government needs to take advantage of the situation by encouraging domestic production,” Nweze said.

  • ‘Renewable energy solution to Nigeria’s energy crisis’

    ‘Renewable energy solution to Nigeria’s energy crisis’

    For so long, the issue of epileptic electricity supply has been a source of concern for many. A number businesses and manufacturers have suffered setbacks because they do not have power to meet their demands. Many therefore make use of generators but this makes the cost of production very high.

    Thankfully, people are beginning to see the need to explore other alternative sources of energy-renewable energy.

    This was the crux of a discussion at a public forum recently.

    The forum tagged: ‘The renewable energy option for entrepreneurs and stakeholders’, drew participants from far and near.

    Incidentally, Dr. John Isemede, Director General, Nigeria Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), who is one of those promoting the need for renewable energy was a facilitator at the forum.

    To the NACCIMA boss, there is a need for a fundamental shift in the way energy is consumed and generated in the country.

    The scale of the challenge requires a complete transformation of the way we produce, consume and distribute energy, while maintaining economic growth, he stressed.

    “Today, we are talking of biomass renewable energy and people are using it in other parts of the world, they are using wave tied to electricity”, informs Isemede.

    He goes on to inform that with the trend around the world, it is not only hydropower that can be used to generate electricity. “People use wind, solar and other sources. With globalisation, there is no home advantage in Nigeria as industrialists believe that the major part of production cost is taken by energy cost apart from the cost of borrowing, distribution and marketing. We all know that what determines success in business is the cost of production but we do not have that here.”

    He adds; “Why is it that the products produced 16,000 kms away in Asia is cheaper? Countries need to plan in the area of their specialisation. We started cocoa export in 1910 yet we cannot process cocoa. It is not that we do not have capacity but we do not have the power. It is cheaper to produce this in other parts of the world. It is sad that we export what we need and import what we have.”

    Sadly, he continues: “We export cocoa pods to bring in chocolate. So we create jobs for other people while our children are unemployed. I went to Netherlands and saw that the biggest cocoa plant is there. There is no cocoa house and no cocoa farm yet they are doing all this. So there is a big challenge. In the past, the price of cocoa was good and proceeds were used to build the Cocoa House. Today, the price of cocoa cannot build the foundation of the Cocoa House. Why are we still importing foods? We do not have energy to process the food produced and even if we have the energy, things are not put in place properly. We have to go back to agriculture because it would give us food; it would give us jobs as well as give us sources of alternative energy.”

    Isemede said countries around the world would not consider the issue of power as a problem, adding that South Africa, for instance, was generating 48,000mw and also supplying Namibia with energy.

    He adds that what the country currently generates could not take care of industries in Lagos State alone and stressed the need to look inwards for alternative sources of energy.

    Buttressing the fact that alternative source energy was safer and cheaper, he said: “Life expectancy in China is the highest in the world now. But today what we are talking about is between 50 to 52 years. A young lady came around and was talking about noise pollution but I told her that she was a smoker and she was surprised. I told her that she was a secondary smoker because a person in a block of flats with eight generators is a secondary smoker.”

    Agriculture, he also stressed, would lead the nation to the proverbial Promised Land. “We have to move agriculture from sustainable agriculture or subsistence farming to value chain agriculture. Those who have been to Kenya know that if you do not have a farm or a house nobody would give you a wife. How are you going to feed her? If you are working in Nairobi and you get your salary, part of it goes to NAGOGO and to your farm. But today all our emphasis in this country is on oil and the electricity that we are talking about, we are generating just 4000 megawatts, which is not enough for Lagos Island alone.”

    Getting the best, he stressed, can happen when there is a total transformation in terms of resources and personnel. “How can you transform a nation without transforming the people? Things are changing in Europe. We are talking about cashless economy and we are talking about a N5,000 bill. There is confusion somewhere. The Transformation Agenda is about Public Private Partnership. Government cannot do it alone. There is nowhere in the world where government has full control of the people and the economy.”

    Isemede goes on to talk about energy and the perceptions of the average Nigerian on the subject. “To an average man, energy is electricity. The technology of the energy we are talking about is not the old technology. As a young man we were using the phone on the table we dialed and from there some of us were going to NITEL with International Direct Dialing (IDD) and from there we moved to the different level of wireless. We should not confuse ourselves with the technology of electricity and that of mobile phones. For instance, there are no wires connecting this wireless system to the main switch, the pole and transformer to the power from Kainji. That is why technology is complicated.”

    To make the required changes, Isemede advised that students and the young ones need to be carried along effectively. “One thing I used to say is that students have been left behind in most of our actions and calculations. As a young undergraduate, the Central Bank of Nigeria was our lecture hall and we go there on a regular basis for statistics. We also went to the World Bank office for records. Most of the things we do now, we do not think that our children and those yet unborn should be carried along. “

    Technologies, Isemede added, are changing and the entity called Nigeria needs to change with time. “Kainji was commissioned in 1959 and my father took me there as a baby and I was able to see things. Three years later, I was taken to Akosombo in Ghana. Today, what legacies are we leaving for our children? How are we building the capacity of our children”, he asked rhetorically.

    Isemede continues: “The essence of going to school is not to Google but to learn and carry out research. In our days in the university, we used to carry three suitcases, two for our books and one for wears. But today the difference is the case. Then if you had a mere pass, a lot of multinationals would be able to build on that.”

    But sadly, he says, this is not so any more. “Now first class degrees have become a generic product that they do not even have management trainee programmes for anybody. All you have today is come and take a job and we give you a target. That is where we are today.”

    Prior to joining NACCIMA , Isemede was an international marketing professional who had worked with Unilever International as the Export/Head of New Market development , Promasidor , Federal Ministry of agriculture , the United nations and Dangote where he was Group Head, Exports and International Business Development Manager, West Africa.